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Figure: Joanna's Time Allocation Budget Line
-(Figure: Joanna's Time Allocation Budget Line) Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. If Joanna's wage rate increases and she ends up working MORE hours:
A) leisure became relatively more expensive.
B) leisure became relatively less expensive.
C) leisure did not change in price.
D) she does not know how to allocate her time effectively.

Question

Use the following to answer questions:
Figure: Joanna's Time Allocation Budget Line 
-(Figure: Joanna's Time Allocation Budget Line) Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. If Joanna's wage rate increases and she ends up working MORE hours:
A) leisure became relatively more expensive. 
B) leisure became relatively less expensive. 
C) leisure did not change in price. 
D) she does not know how to allocate her time effectively.

Quizplus · Accepted Answer

When Joanna's wage rate increases, the opportunity cost of leisure increases, making leisure relatively more expensive, which can lead her to work more hours.

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